Unions propose paying more to fix pension crisis

A coalition of public employee unions said Wednesday pension reform plans before the General Assembly are unconstitutional and unfair to workers. We Are One Illinois said workers would be willing to contribute an additional 2 percentage points of their salaries toward their pensions if they secured an “ironclad” guarantee the state would make required pension contributions.

A coalition of public employee unions said Wednesday pension reform plans before the General Assembly are unconstitutional and unfair to workers and called for talks with government leaders to negotiate an alternative.

We Are One Illinois said workers would be willing to contribute an additional 2 percentage points of their salaries toward their pensions if they secured an “ironclad” guarantee that the state would make its required pension contributions.

The coalition also called for ending numerous business tax breaks, as well as imposing some new taxes, that it said could raise $2 billion annually toward paying down pension debt.

“The state of Illinois has a massive pension problem, the root of which can be expressed in one single word, revenue,” said Illinois Education Association president Cinda Klickna. “We have yet to see the governor or the legislators produce a pension proposal that meets the basic standard of being constitutional, much less a plan that is in any way fair.”

The coalition criticized both earlier pension reform plans and a bill introduced by rank-and-file lawmakers two weeks ago to spur pension reform talks. Both would change pension cost-of-living adjustments, which Gov. Pat Quinn’s administration has said are the biggest factor in increasing pension costs. The coalition said reducing COLAs will erode retirement security and is unconstitutional.

Coalition representatives said increasing employee contributions by 2 percent would raise about $350 million annually. Employee contributions vary widely depending on the pension plan. State employees covered by Social Security pay 4 percent of salary, while teachers, who are not covered by Social Security, pay 9.4 percent. People holding some law enforcement jobs pay as much as 12.5 percent.

‘Going to hurt’

“That (increased payments) is an extremely bitter pill for public employees to swallow, because they did not cause the funding shortfall,” said Sean Smoot, legal counsel for the Illinois Police Benevolent and Protective Association.

“It is going to hurt, but that is genuine shared sacrifice,” Klickna said.

However, the group said, such an increase in employee contributions must be accompanied by an ironclad guarantee that the state will make its full contribution to the pension systems, plus an amount to whittle away the pension debt, currently put at $96 billion.

The coalition outlined a lengthy list of tax breaks that should be eliminated, including those for biofuels, farm chemicals, and several intended to promote economic development.

The coalition also proposed some new taxes, like taxing digital books, magazines and games, and imposing a new tax on satellite TV service.

All together, the coalition said, the menu of tax increases would raise about $2 billion per year that could be applied to pensions.

Many of the tax breaks have been targeted before for elimination, but lawmakers haven’t ended them. Also, lawmakers are eyeing some of them now as a way to pump more money into the state’s public works construction program, which would make the money unavailable for pensions.

“In the past session or two, there seems to be more of a willingness of lawmakers to engage in this discussion,” she said.

Coalition members acknowledged they could not say when their combination of higher employee contributions and higher taxes would bring the pension deficit to a manageable level.

Seeking negotiations

“We want to sit down at the table and look at the figures,” Klickna said. “Any proposal that’s out there right now has not had any actuarial costs done on it.”

The coalition plan does not include changes in pension benefits. Such changes would lead to “staggering” legal costs as they are challenged in court, the coalition said.

“Any proposal that seeks to cut benefits is only prolonging the problem,” Gauvin said.

“We are calling on legislative leaders to sit down with us, take a serious look at our positions and work with us to craft a bill that we can support,” Klickna said. “We want to see it pass during the next General Assembly.”

Quinn has said he wants pension reforms passed by Jan. 9, when new lawmakers are seated.

“I think we have had some very positive discussions with legislative leaders and members of both parties,” Quinn said at an appearance Wednesday. “I’m optimistic we can come up with a sound plan that meets all constitutional tests, is fair to workers and is also fair to taxpayers.”

The coalition’s proposal is not entirely new. In August, as lawmakers were preparing for a special session on pension reform, the coalition said it was willing to negotiate higher employee contributions in exchange for guaranteed state payments into pension systems. The coalition also called for ending business tax breaks.